eToys buys eParties in $1.6 million deal

eToys has absorbed much of what was struggling
party-planning site eParties in an all-stock deal
valued at $1.6 million, the online toy store said.

The move was expected. Last Monday, an eParties spokesman said the
company was in the
process of being acquired. Days before that, eParties,
which launched only
eight months ago, had laid off much of its staff.

eToys said it bought the eParties name and some of its
technology, including
personalization software that aids in party planning.
Santa Monica, Calif.-based
eToys also hired eParties chief executive David
Haddad as a senior vice
president, eToys said.

Last month, eToys said it planned
to expand into party goods and hobby products. In
preparation for next
holiday season's clash with toy titan Toys
"R" Us' Web unit, Toysrus.com, eToys has steadily fortified itself by
increasing its products and service offerings. In addition to toys
and video games,
eToys sells software, books, videos, music and baby
products.

eToys wants to be the one-stop shopping destination
for all things children, said Gomez Advisors analyst Liz Leonard.

"Moving into party planning is a smart move on eToys'
part," Leonard said.
"The margins are high in this particular category, and
the cost of bringing
eParties in is probably low. But they have to do a lot
more if they are
going to stand a chance against Toysrus.com, which is
just too big and
possesses too strong a brand name."

For eParties, the sale shut the lights off on the firm
begun by Net
incubator eCompanies
and its co-creators, former Disney executive Jake
Winebaum and Earthlink
founder Sky Dayton.

Indeed, for many of the event-planning sites, the life
seems to have gone
out of the party. Analysts say event planners are hard-pressed to generate
cash flow and face competition from Web
giants who may decide to
build their own planning services rather than acquire
one. Yahoo has entered
the market and, given its sizable audience of users, poses a significant
challenge to the existing companies.